Interview with Alok Kumar

“Uttar Pradesh has the potential to become a leader in the renewables space”

Over the past one year, the Uttar Pradesh government has taken several initiatives to promote renewable energy development. It issued a series of utility-scale solar power tenders, which were successful in attracting a positive response from the industry. It was at the forefront in encouraging investments in the bioenergy segment. The state government also issued a series of enabling policies and regulations to streamline renewable energy uptake. In an exclusive interview with Renewable Watch, Alok Kumar, principal secretary, additional sources of energy, Government of Uttar Pradesh, highlighted the state’s progress in renewables, the key challenges and its plans for the sector. Excerpts…

What is the current power supply situation in Uttar Pradesh?

Uttar Pradesh is a large state with a huge population, and this poses unique challenges in ensuring quality power to all consumers. Despite this logistical hurdle, the overall power situation in the state has improved dramatically over the past few years. The financial health of state discoms has improved consistently with average aggregate technical and commercial (AT&C) losses declining from more than 30 per cent to 27.5 per cent in 2017-18, and further dropping to 24.8 per cent in 2018-19. While average AT&C losses were expected to reduce significantly in 2018-19, these did not fall below the 24.8 per cent level, mainly on account of the state’s focus on 100 per cent electrification. It is noteworthy that Uttar Pradesh has been successful in electrifying all of its villages and hamlets under Saubhagya, thereby significantly improving its power supply.

What is the share of renewables in the total power mix of the state?

Uttar Pradesh achieved a total renewable purchase obligation (RPO) of 5.94 per cent in 2018-19 as against a target of 6 per cent set by the Uttar Pradesh Electricity Regulatory Commission (UPERC). We want to increase the RPO percentage in our state rapidly, and our expectation is that by the end of 2023-24, it would reach 14.81 per cent. This significant increase in renewable energy share is expected despite the substantial growth projections of power demand in the next five years. For meeting the huge RPO expectations by 2023-24, 1,480 MW of non-solar power (comprising biomass, municipal solid waste and wind power) and 1,650 MW of solar power has already been contracted for commissioning by 2020-21.

How is the state planning to increase its renewable energy uptake?

Uttar Pradesh has planned significant renewable energy capacity additions – 7,250 MW of solar power and 2,500 MW of wind power – by 2023-24. While wind power will be procured from interstate transmission system (ISTS)-connected projects in wind-rich states, solar power will mainly be sourced from power plants based in Uttar Pradesh, with some capacity from the Bhadla Solar Park in Rajasthan. The development of solar power plants in the state will attract investments and create significant job opportunities. To achieve these targets, the state plans to bid a total of 5,250 MW of solar power capacity in three phases –  1,100 MW in 2019-20, 2,150 MW in 2020-21 and 2,000 MW in 2021-22. We will give preference to development of solar power plants within the state.

Apart from large renewable energy plants, Uttar Pradesh has targeted setting up several projects under the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM). We plan to install 100 MW of solar power capacity in 2019-20 and 150 MW in 2020-21 through small utility-scale plants of 0.5 MW to 2 MW of capacity near substations. Once this is sanctioned, farmers will themselves be able to set up these projects or lease land to developers for setting up solar plants and selling power to discoms. We also have a target of setting up 10,000 off-grid solar pumps in the state. Finally, Uttar Pradesh aims  to solarise 5,000 existing grid-connected pumps in 2019-20 and 10,000 pumps by 2020-21, which would collectively make up 15 per cent of the national target.

What have been the key regulatory highlights in Uttar Pradesh during the past one year?

In December 2018, the UPERC released the forecasting, scheduling and deviation settlement regulations for solar and wind power generators. These regulations are applicable to all solar and wind power projects in Uttar Pradesh connected to the intra-state transmission system and having an installed capacity of 5 MW and above. As per the regulations, all wind and solar power producers have to provide a daily power generation schedule to the state load despatch centre, for every 15-minute interval, one day prior to generation. The power producers also have to pay deviation charges if the deviation from the scheduled generation is more than 15 per cent.

To encourage renewable energy uptake in the state, the UPERC has released draft Captive and Renewable Energy Generating Plants [CRE] Regulations, 2019. As per regulations, captive power plants are allowed 100 per cent power banking at 6 per cent banking charges instead of the previous 75 per cent power banking at 12.5 per cent banking charges, not only during plant shutdowns or emergencies but also at any time required. For other renewable energy generators also 100 per cent power banking is available at 6 per cent banking charges. For captive and third-party intra-state power sale arrangements, the draft regulations provide a 50 per cent exemption on wheeling and transmission charges.

How is the state addressing transmission and land acquisition-related challenges?

Due to the availability of abundant unutilised land, most of the solar power development is likely to take place in the Bundelkhand region as well as in Mirzapur and Sonbhadra districts of the Purvanchal region of the state. The population density is quite high in the rest of the state making it difficult for the development of large solar power projects. We have recently amended the Revenue Code provisions making it possible for a commissioner-level official to give permission up to 40 hectares of land instead of the previous 5 hectares. The time duration for granting land use permits has been limited to 45 days. As per new laws, a farmer can also lease his land to developers for setting up solar power plants; this is expected to help in resolving issues related to land transfer.

Incidentally, much of the solar-rich land in Uttar Pradesh lies in the Bundelkhand and Purvanchal regions, which have very little power consumption needs due to less population. Thus, significant transmission expansion is required in this region for evacuating the planned solar power capacity. Hence, the bidding and setting up of at least 4,000 MW of solar power capacity in these regions is dependent on the Green Energy Corridors project, which is scheduled for completion in 2022-23.

This will be a game-changing transmission project for Uttar Pradesh and is already at an advanced stage of sanction at the central government level. The Ministry of New and Renewable Energy has already recommended this project to the Ministry of Finance, and efforts are on to secure a loan from Germany for the same. The government also has a subsidy-linked programme for the development of transmission infrastructure in this region.

What is the current installed capacity in the rooftop solar segment? What are the provisions of the state government to promote this segment?

Uttar Pradesh has witnessed a significant growth in its installed rooftop solar capacity in recent years with new capacity additions going up to 64.66 MW in 2017-18 and 122.5 MW in 2018-19. The state plans to continue promoting rooftop solar deployment through enabling policies and regulations. Under the UPERC’s Rooftop Solar Power Plant Regulations, 2019, only residential and agricultural consumers falling under LMV-I and LMV-V categories are now eligible for net metering. Other categories including commercial, industrial and public consumers are eligible for gross metering. For bulk consumers, gross metering is adequately beneficial.

Does the state encourage open access and third-party power sale projects?

The Uttar Pradesh Solar Policy, 2017, has provisions for use of solar power plants for captive power consumption as well as for third-party power sale. The state also provides a 50 per cent exemption on wheeling and transmission charges for intra-state captive and third-party sale of solar power.

Apart from this, 100 per cent exemption on transmission and wheeling charges, and cross-subsidy surcharge is provided on interstate sale of solar power. The state authorities have already sanctioned 485 MW of solar open access capacity including both captive and third-party power sale projects. The state plans to continue promoting open access in the future also in accordance with transmission availability.

What is the future outlook for the renewable energy sector in Uttar Pradesh?

We believe that the outlook for future renewable energy uptake is very positive. The state discoms do not have the usual issues of payment delays to developers of renewable energy. In addition, unlike many other states, Uttar Pradesh does not have any generation curtailment apart from grid security reasons, which is beneficial for developers. The issues related to the adoption of tariff discovery methodology in competitive bidding are also being addressed through suitable regulations. Thus, there are ample opportunities both for generating and consuming this renewable power. With Uttar Pradesh having the largest energy consumption in the country, the state has the potential to, in fact, become a leader in the renewable energy space.

Alok Kumar Principal Secretary, Additional Sources of Energy, Government of Uttar Pradesh

 

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